what is a wealth cycle and you know
there's only so many different asset
classes and I've picked the three major
ones here paper assets like stocks and
bonds real estate and commodities which
include precious metals but precious
metals are a little bit different than
the rate than the rest of the
commodities because they're also money
so they're a safe-haven asset in times
of crisis so there are some times when
commodities can be going down but
precious metals go up but if investors
are rushing from one asset from other
asset classes into one asset class
pushing this asset class into a bubble
shouldn't it be drawing currency away
from the ones they're selling and
shouldn't those fall yes I mean it
should
except we live in a world where they're
constantly creating currency and
everybody is getting a little bit of
this currency and so instead of the
things that are being undervalued
falling they either go sideways or they
increase just a little bit as the one
asset class is going into a bubble
because of all of this currency creation
and so this is based on a real-world
example it's just a very simple diagram
but this is from the 70s if gold is
going up and if stocks or real estate it
was both stocks and real estate in the
70s but I'm using stocks here because
I'll show you the actual chart of that
later if gold is going up at a much
faster rate and it did during the 70s
stocks rose a little bit but basically
they were sort of bouncing along
sideways and going up a little if you
were invested in gold when you sold 10
years later you could buy many many many
times more stock if you were invested in
stocks when you sold you could only buy
a fraction of the amount of gold that
you could have had you just invested in
gold in the first place or conversely
just a spinet on food gasoline you know
your house payment a new car whatever
stocks did not keep up with them with
inflation during that period of
but then one asset becomes too
overvalued the other one becomes too
undervalued and the cycle reverses and
it did for 20 years gold went down from
1980 to the year 2000 and stocks entered
a bull market that was one of the
greatest stock bull markets in history
from 1980 until the year 2000 with the
blow off top of the tech bubble and then
it reversed again and we're about
halfway through this cycle right now and
what's happening here is they're
printing currency right at about this
rate in the middle so this is the
investors rushing back and forth from
one asset class to another but the one
that's underperforming doesn't actually
go down because they keep on printing
all of this currency now if you take one
asset class and divide it from by the
other asset class and it doesn't matter
which way which direction you do this
you can take gold / shares of the Dow or
the Dow the price of the Dow Jones
Industrial Average or S&P 500 / gold or
your house / gold or Bush's a wheat or
tons of iron or barrels of oil or shares
of the Dow and what you discover is that
everything is trapped in what I call a
valuation range and you can be invested
for sin in one thing for a very very
long time and end up nowhere but if you
can measure when something is overvalued
and and something else is undervalued
and you can see that because you have to
measure it to be able to see it you
can't see when something's overvalued or
undervalued in this monetary system
that's constantly expanding and so if
you can see that then you can sell the
undervalued asset class sell the
overvalued asset class and by the
undervalued asset class and it's like
busting these cycles apart and pasting
the next wave onto the end of the last
one and it is a road to true wealth I'll
show you that in a moment now some of
the examples I'm going to give here I
understand that nobody can catch the
exact top of anything
and that these are much longer time
frames than most people's lifetime even
however I just want to show you the
immense power of this the the types of
gains that can be made this is in the
1920s this is a upper-middle class home
nice like four bedroom large home with a
swimming pool in the backyard and a
decent amount of land and that's sold
for about three thousand dollars in the
1920s and Gold was $20 an ounce back
then so it was it was worth it it would
have cost $3,000 or 150 ounces of gold
conversely if you had sold the home you
could have gotten a hundred and fifty
ounces of gold for it and then in the
30s because of and this is just a few
years I mean this could have been 1928
and this is 1932 so it's not very long
that you had to wait the house fell to
$2,000 Gold was now $35 an ounce so that
meant that this house only cost 60
ounces of gold if you had sold this
house for a hundred and fifty and just
to come and bought gold and then
repurchased you could have gotten 2.5
times the amount of real estate in just
those few years then in 1970 that house
was now $30,000 but gold was still $35
an ounce so it cost 850 ounces of gold
so if you had bought this home their 2.5
times more real estate in the 30s and
then in the 70s sold for when it was
$30,000 eight hundred and fifty ounces
of gold you would have received twenty
one hundred and twenty five ounces of
gold then just a decade later because of
rampant inflation the house was now
sixty thousand dollars but gold became
free trading in 1971 and it went from
$35 an ounce up to 850 so that house was
now worth 70 ounces of gold it went down
from 850 down
to 70 during that period of time so if
you repurchased real estate with your 20
125 ounces worth of gold you would have
now gotten 30 of the same type of home
that you sold in 1920 you would now own
30 of them and then in the year 2000
gold bottoms at 250 dollars that house
was now worth $200,000 same house the
house hasn't changed it's two hundred
thousand dollars but gold had gone down
so it now cost 800 ounces and so if you
sold the house in the year 2000 you
would have received twenty four thousand
ounces of gold then in 2011 gold hit
nineteen hundred and twenty five dollars
an ounce and the house was now worth
three hundred thousand dollars but it
was only worth a hundred and fifty
ounces of gold so you could have in in
2011 bought a hundred and sixty homes
with the proceeds from taking this one
home and just going back and forth to
different asset classes a hundred and
sixty homes however this cycle isn't
done yet this is you'll see later in the
Dow gold ratio Gold's price went from
thirty five to two hundred from 71 to 74
and then it went back to 100 to late 76
and then it took off and went to hate
fifty we're basically in that mid cycle
correction now and it's pretty much over
with and so now we get to see the
fireworks of the end of this cycle I
don't know when the end is going to be I
don't know if it's going to be twenty
nineteen Twenty twenty Twenty twenty one
twenty two could be Twenty twenty three
but what I what I'm fairly confident in
is that that house is on measure did you
know it could be thirty thousand dollars
measured in u.s. dollars if we have if
we're still fighting deflation then we
don't have any big inflation if but it
could also be three million dollars
if the if the Federal Reserve is
fighting deflation they just print and
print and print and it keeps on going
into real estate and the stock market
but either way it's pre-measured in gold
it's probably going to be somewhere
around 50 ounces of gold and if it hits
50 ounces of gold that means you could
buy 480 homes that are the same home
that you started here with in the 20s
it's it's just the same investment just
jumping from different asset classes now
the gold that you received here makes
you were let me see I think that was
about 30 million dollars worth of gold
if you hang on to it and buy this real
estate this is about a billion dollars
worth of real estate so you have gone
from three thousand dollars to a billion
dollars that's you know this sounds
absurd but these are just numbers this
is an exercise on what is a wealth cycle
and how big is its power so this is the
maximum power you'd have to have a lot
of luck but you can catch quite a bit of
this wave just by looking at numbers and
making the right decisions now I'm going
to show you a real world example of the
Dow Jones Industrial Average this is it
measured in points and this is a fairly
old chart I'm I didn't it would take
several days if not a week to update
this presentation to today's prices and
everything I'm teaching a concept here
at the end of the presentation I'll give
you today's price of gold and I'll tell
you where this would be if these charts
were going today but when you take this
chart that goes back to the year 1900
and when you take it and divide the
points on the Dow which are basically
determined by the dollar value of the
underlying stocks so call points dollars
take the points on the Dow divide them
by the price of an ounce of gold and you
get the Dow Jones Industrial Average not
priced in dollars but priced in gold and
what you see is that it's it's going
nowhere it goes up and down the bubbles
are getting bigger because we keep on
printing more and more
and more fiat currency but there's a
mean here an average that it goes
through it's going to return to that and
it's probably going to overshoot and
when it does I think that this is one of
the greatest opportunities presented to
anybody in modern times and I sort of
see this as an inevitability and one
thing I do want to say is that if you
would purchase to show you that if you
ride just one asset class you
potentially get nowhere over a lot of
your lifetime if you had invested in the
Dow in stocks in 1929 right at the peak
of the stock market bubble it would have
cost 818 ounces of gold to buy one share
as the Dow and if you held on to it for
89 years those stocks and sold them now
you could buy 19 ounces of gold your
return for the whole eighty nine year
period was 5.6 percent it's about six
107th per year and you know there were
periods during this time when we had
raging inflation in other words you
didn't go anywhere you were invested
your entire lifetime and you didn't make
a gain so if you take this you can see
that there's sort of a cycle here but if
you really want to see the cycle this is
the Dow measured in priced in gold but
if you take gold priced in the Dow you
get this chart overlay that with the Dow
priced in gold and now you can really
see a cycle I mean that is just a
perfect cycle that you can jump in and
out of but you only have to make a few
decisions in your entire lifetime to be
an immense winner if you had invested if
yeah if you're invested in stocks and
you ride them up and sell and buy gold
and measure to see when gold is getting
overvalued and stocks are undervalued
again go back into stocks and then back
into gold and then back into stocks and
back into gold if you had invested back
here just $30 in stocks and did this
technique
thirty dollars would have become fifteen
million dollars from just thirty now
this again is almost impossible to catch
the exact peak and the exact bottom of
everything and to have perfect timing
but it just shows you the immense power
of this and if you only catch one or two
of these in your lifetime there's still
immense gains that you can make and
you're escaping that valuation channel
that is the most important thing is
getting out of that valuation channel
and actually going somewhere this the
total maximum that you could have
achieved here is 50 million percent
returns that's unheard of now this also
would have taken three generations this
is more than a hundred years you're
talking about 1903 to the year 2018 so
that is the end of this portion of the
presentation the next portion is going
to be the everything bubble we're going
to update you on where stocks are where
real estate is where bonds are so thank
you very much for watching this section
I hope you really got something from
that because this is the difference
between price and value that home went
up in price constantly but the value
measured in gold went from a hundred and
fifty to fifty to eight fifty down to 72
eight hundred so it was bouncing in that
valuation range that I was talking about
learn these things it's a powerful tool
we'll see you in the next piece